NEWS
Downsizing driving Scottish home mover property market
12-10-2012
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One in five Scots home owners are downsizing earlier than expected, with a third intending to trade down to help reduce household bills, says the report from the Bank of Scotland.
That means that 44% of potential home movers in Scotland are looking to downsize within the next three years, compared to just 23% looking to trade up to a larger property.
For home owners reaching retirement it is common to consider downsizing to a more manageable home but the research found that the reasons for downsizing have broadened in these tough economic times.
Whilst 68% of potential downsizers in Scotland want to move to a smaller property that is better suited to their circumstances, 34% would like to move to a smaller property to help reduce bills.
Also 32% would like to free up equity in the property and 32% said they want to downsize to help support retirement plans. Some 21% of those considering downsizing are looking to trade down earlier than expected, with the majority citing financial concerns as the key driver.
Whilst older home owners in Scotland are still playing a key role in the downsizing market, the research highlights that home owners of different ages are now considering it as an option.
Some 68% of potential downsizers are over the age of 55 but 25% are aged between 46 and 55 and over 5% are aged between 36 and 45.
The report showed that 64% of potential movers considering downsizing have lived in their current property for over a decade. However, 25% have lived in their property for between six and 10 years and 11% have lived in their property for only five years or less.
‘Downsizers are now playing a key role in the Scottish housing market and as the study shows we are starting to see homeowners on different stages of the property ladder considering it as a sensible option as more and more families are looking at ways to save money,’ said Laurence Mann, head of mortgages at the Bank of Scotland.
‘Whilst we have seen a significant rise in the potential cash windfall, downsizing can make a lot of sense for a wide range of people, it is important to consider carefully whether trading down is the best solution. Whether you are looking to lower utility bills, pay for an offspring's tuition fees, or free up extra cash for retirement we recommend you seek professional advice before taking action,’ he added.
Those in Scotland looking to trade down later in life have seen their potential cash windfall rise by more than 64% over the past decade. Trading down from a detached home to a bungalow would have earned an average windfall of £63,811 in 2012, an increase of £24,948 since 2002.
For those trading down early in Scotland the windfall associated with downsizing from a detached property to a semi detached property has risen by 67% over the past decade. A downsizer today would receive an average windfall of £102,308 compared with £61,055 in 2002.
The research also found that 43% of potential downsizers plan to move to a bungalow, 40% believe a second stepper will buy their home, whilst 31% believe home owners in their third home would be most likely to purchase their house.
Some 72% expect to make a profit when they sell their property and 42% plan to invest that money into a new property, 16% plan to pass it down to their family and 13% plan to top up their pension.
